Labour and Knight to meet

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Mike O'Brien, the Labour Party's financial services spokesman, will next week meet Angela Knight, the Treasury minister, to try to hammer out an agreement over the Government's controversial plans to make changes to the Building Societies Bill.

The Labour Party's support for the proposed legislation is vital if Mrs Knight is to get her new-look Bill through Parliament. "I hope we can achieve consensus," Mr O'Brien said yesterday. "We want to see this Bill on the statute books."

The planned changes to the Bill could delay share and cash hand-outs to millions of building society members. They may even threaten the plans of some societies to convert into banks next year.

The proposal causing the main concern among the converting societies is the removal of five-year protection against being taken over once they have become banks.

The newly converted banks would lose the protection immediately after buying a building society or any other type of financial institution.

Societies are also concerned about confusion over the planned legislation which may force them to revise the weighty transfer documents that must be sent to the members before they can become banks.

"It's quite feasible that if legislation gets anywhere near the statute books in this shape, the board of directors would have to look very, very carefully as to whether to go ahead with the flotation," John Caine, director of corporate affairs at the Alliance & Leicester building society said yesterday.

The Alliance & Leicester has already sent a 96-page transfer document to each of 3.5 million members.

The planned removal of takeover protection has pleased the Building Societies Association, which has lobbied hard to get this right removed.